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AT&T, Excite@Home reach service deal

AT&T Broadband reaches an agreement with the high-speed ISP that will let the company continue offering service to new customers.

AT&T Broadband on Wednesday reached an agreement with Excite@Home that will allow the high-speed Internet service provider to continue offering service to new customers.

The unit of AT&T said the agreement would take effect Thursday.

Wednesday's deal between the two companies comes after similar deals were struck with Excite@Home. Tuesday, cable companies Comcast and Cox Communications both said they would work with Excite@Home to find a way for it to resume service for new customers. Rogers Communications also reached a similar agreement Friday.

An Excite@Home representative would not release the financial details for any of the deals.

Excite@Home, which filed for Chapter 11 bankruptcy protection this month, said last week that it would stop accepting new customers because of cash constraints.

Michael Harris, president of broadband research firm Kinetic Strategies, said the intentions of the cable operators point to Wall Street and meeting earnings estimates.

They all "have numbers they have promised Wall Street and are counting on the revenue they get from people signing up for the (Excite@Home) service," he said.

He added, however, that the cable operators' arrangements are a short-term solution. The cable companies want to eventually break away from Excite@Home, which receives about a third of the revenue derived from high-speed access customers. The rest would go to the cable companies.

"When they had thousands of customers, that was not much money. But now that we're talking millions of customers, that's a lot of money that the (cable operators) want to keep," Harris said. "I think most cable operators will be able to offer this service themselves by early 2002."

The move by AT&T Broadband comes as its parent company seeks to acquire Excite@Home's broadband Internet access business for $307 million in cash. No other bidders have yet to step up to the table, the Excite@Home representative said.

But some bondholders and creditors are leading efforts to undo the deal, which was entered as part of the bankruptcy filing. Some of the options may include opening the asset sale to an auction process, or keeping the company independent.